Gildan's board abruptly resigns ahead of annual meeting, handing control to activist

Gildan apparel at a store in Montreal, Quebec, Canada, on Friday, Dec. 15, 2023.

Graham Hughes | Bloomberg | Getty Images

Gildan Activewear said on Thursday that its entire 12-person board would resign immediately in favor of activist Browning West’s eight nominees, abruptly ending a contentious proxy battle and restoring former CEO Glenn Chamandy to the company he founded.

Browning West along with a significant number of Gildan shareholders had been fighting to bring back Chamandy as CEO, after he was ousted in December in favor of Vince Tyra, who was brought in from Houchens Industries. The activist firm later claimed Gildan’s board was showing a “complete disregard for sound corporate governance.”

It’s the second mass resignation in the boardroom after five directors stepped down earlier this year as part of a “board refreshment.”

The last time an entire board resigned during an activist battle was in 2012, when Canadian Pacific’s board yielded to Pershing Square founder Bill Ackman hours before the railroad’s annual meeting.

“We are deeply grateful for the outpouring of support that Browning West’s slate and plan have received from our fellow shareholders, Gildan employees, and leading proxy advisory firms,” Browning West’s Usman Nabi and Peter Lee said in a statement.

Headquartered in Montreal, Gildan is a supplier for major U.S. retailers and corporations, including Amazon and Target. Under Chamandy’s leadership, the company has been trying to improve its overseas operations, with a focus on margins and spending.

Browning West, based in Los Angeles, accused Gildan’s board of leaking an allegedly nonexistent sale process to the media and hiring private investigators to look into one of the firm’s nominees. Gildan accused Chamandy of mismanagement and said Tyra was the ideal candidate to lead the company into its next stage. The company spent nearly $30 million on advisors to stave off the activist investor.

Michael Kneeland, a former CEO of United Rentals, will become Gildan’s chair. The seven other directors, including Chamandy, are expected to soon take up their roles. Other major shareholders, including Anson Funds and Janus Henderson, backed Browning West’s push. The activist also won full support from proxy advisors Glass Lewis and ISS.

“I’m extremely excited to return as Gildan’s CEO and am gratified for the incredible support I have received from both shareholders and employees over the past six months,” Chamandy said in a statement.